In this interview with the MRKT Call Podcast, Jim Chanos discusses the existence of “animal spirits” in the market, where emotions like speculation and short covering, rather than fundamentals, are driving prices. He cites unprofitable companies experiencing significant stock price increases as evidence of this emotional trading. Here’s an excerpt from the interview:
Chanos: First of all there’s eight people in that pool have better insight into the Fed than I do.
So number one I have no idea where rates are going but let me just point out to you as we talk about Microsoft and AMD and Nvidia, there’s a whole bunch of companies in my world that just lose lots of money, right! That report hundreds of millions of losses per quarter that are up 4x from October.
Speculation, speculation. That’s what they’re pricing. And you know short covering, whatever have you, and by the way the short interest doesn’t drop on these names so it’s not short covering.
But you know problematic business models that have lost money for the last five years and show no signs of making any money and yet those stocks went up as much as Nvidia and Microsoft and AMD.
And they’ve come in some more than the big six but are still up a ton from just four months ago.
And so this is a market with a lot of “animal spirits” in it.
You can watch the entire discussion here:
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